America can leave a war. But can it end one?

By: Azhar Azam

The global war on terror that the United States launched in 2001 was one it could choose to leave. Washington invaded Iraq and years later, it withdrew from Afghanistan. Neither exit was clean — an insurgency returned in one country and the Taliban in the other. Still, America could unilaterally decide its campaigns were over.

That power remains. Washington can stop fighting Iran, raise or lower its support for Ukraine and broker a ceasefire between Hamas and Israel. What has changed is that declaring its involvement over won't keep it out. Even if a war pauses or a deal is reached, the conflict may erupt again, pulling America back in.

Three conflicts, albeit not equivalent, taking place across regions show that the United States can influence their course yet cannot control their endings. In Ukraine, the United Nations has documented tens of thousands of civilian casualties since Moscow's full-scale invasion of Kyiv in 2022. While the United States can alter the scale of its support to Ukraine or push Kyiv toward negotiations, it cannot force Russia to stop fighting or compel either side to accept peace. The decision to end the war rests with the parties fighting it.

In Gaza, Israel's military campaign has triggered roughly 75,000 Palestinian deaths and the US-brokered ceasefire hasn't meant an end to the dying, highlighting a pause in violence is not the same as an end to the conflict. America may help negotiate a ceasefire, it can't guarantee the conflict won't resurface.

A twelve-day war between Iran and Israel-Iran June 2025 ended quickly through negotiation, killing over a thousand people in Iran and 28 in Israel. Eight months later, the United States and Israel launched a far larger military campaign aimed at regime change in Iran. A Pakistan-mediated ceasefire took hold for a brief period before collapsing in July.

A war that seemed to prove endings are negotiable was followed, within months, by one that has resisted every attempt to close it. America, again, hasn't lost the ability to leave the war; the challenge is that leaving doesn't guarantee the conflict is over. Even if a compromise is reached with Tehran, an Iran-Israel conflict may still draw Washington in.

Ukraine, Gaza and now Iran show how easily that control slips away. The cost of a war that cannot be ended is not just money and lives. It is also the military capacity consumed fighting those wars. During the Iran-Israel war last year, the United States reportedly fired 150 THAAD interceptors to protect Israel, more than a quarter of its inventory in addition to 80 Standard Missile-3s to neutralize the incoming Iranian projectiles.

The 2026 escalation drained the reserves further with the Center of Strategic and International Studies estimating the US inventories of THAAD and Patriot interceptors had fallen to fewer than 1,000 and about 250 respectively. This is a different sort of scarcity than a strained budget. Unlike money that can be raised, borrowed or reallocated, these interceptors take years to build on a production line that can't be scaled up overnight. This shortage is affecting Ukraine and other US allies in the Indo-Pacific relying on America to replenish their missile stockpiles.

Global military spending hit a record $2.9 trillion in 2025 — 2.5% percent of world output, the highest share since 2009. Although global outlays grew by 2.9%, expenditures rose by 9.2% outside the US including a 14% spike in Europe and 8.1% in Asia and Oceania. And one reason it keeps climbing is that no government can confidently predict the number of conflicts its arsenal may need to cover.

Insecurity triggers an acceleration in rearmament that outpaces industrial capacity. Given a multi-year timeline is required to expand defense production, a war fought to exhaustion in one theater weakens deterrence in the other. As Ukrainian President Volodymyr Zelensky said his country had about two-and-a-half times fewer interceptors than it did in 2025. This self-reinforcing vulnerability emerges when states draw on the same finite supply chain.

This does not mean that every war should be rushed to a close. A settlement can be worse than war if it only postpones the next round. Ukraine, for example, can't be expected to secure peace by accepting terms that leave it exposed to another invasion. The real challenge is not stopping the war but whether it promises an ending that actually holds.

Twenty-five years after the towers fell, the United States is still capable of fighting wars it could choose to leave. What it is yet to learn is how to survive wars in which leaving is possible but ending, and rearming for the next, is not.

*My article (unedited) first appeared at Eurasia Review

Iran war-depleted arsenal making US a less potent power

By: Azhar Azam

The Iran conflict has exposed a glaring blind spot in US war strategy. America can escalate in hours, but it can take years to rebuild the arsenal it consumes. Washington has begun addressing the arms-replenishment problem, a calculation it should have made before escalating.

The Pentagon’s recent awards reflect the intensity of the challenge. In the past few days, it has announced a US$24.4 billion contract for Raytheon to accelerate Standard Missile-6 (SM-6) production, after awarding $20.7 billion for AMRAAM missiles and a $58.6 billion Patriot deal with Lockheed Martin. Each is meant to replenish stocks depleted by the war, but signing the contracts does not put depleted missiles back in the arsenal.

The shortage is already showing on the battlefield. Commanders on US bases in the Middle East have reportedly begun letting some incoming Iranian missiles land when they are headed for unpopulated areas, saving scarce interceptors for missiles that could do real harm.

Yet in a recent Time magazine interview, President Donald Trump downplayed a Pentagon report on munitions shortages while acknowledging that some stocks are running low.

Independent estimates underscore the large-scale drawdown of high-value munitions. According to the Center for Strategic and International Studies (CSIS), the US stockpile of Patriot and THAAD interceptors had fallen to fewer than 827 and 278, respectively, by July 27.

The drain on the reserves started earlier. In the 12-day war of June 2025, US forces reportedly fired more than 150 THAAD interceptors and about 80 SM-3s to defend Israel from Iran’s incoming projectiles.

Washington recognized the replenishment challenge even before the Iran escalation. In January, the Pentagon and Lockheed Martin signed agreements to raise annual THAAD output from 96 to 400 and Patriot PAC-3 production from roughly 600 a year to 2,000 by the end of the decade.

But while money can be raised, borrowed or reallocated, factories, workers and supply chains don’t move as quickly. The manufacturing lead time of these interceptors ranges from 25 to 51 months, meaning they can’t be scaled up overnight. A Pentagon Inspector General report released in September found that the Iran war had exposed industrial bottlenecks, triggering a shortage of key munitions.

To be sure, the US military can still sustain the current Iran fight. Yet rapidly depleting munitions may weaken deterrence in other theaters. The Congressional Budget Office estimates that US forces have probably used between one-half and two-thirds of their missile-defense interceptor inventory since June 2025, and rebuilding it may take at least five years, even with increased production.

The shortage is already affecting Ukraine. Kyiv has reported an acute shortage of Patriot interceptors since the Iran war began. In August, President Volodymyr Zelensky warned that Ukraine had two and a half times fewer interceptors than it had in 2025, while Russia fires twice as many ballistic missiles a month.

Washington has historically underestimated how long military commitments can last, straining its arsenal. The 2003 Iraq war was expected to produce a rapid victory, yet the US military commitment lasted far longer.

Just 11 days into the 2003 Iraq war, US forces were running critically low on some key weapons, having fired 700 of 1,200 Tomahawk cruise missiles and thousands of satellite-guided bombs. The Pentagon rushed to replenish stocks, but production couldn’t keep pace with wartime consumption.

Trump is doubling down on the same mistake, pursuing a swift, decisive victory while promising to end America’s past “forever wars.” He initially said the Iran war would last just a few weeks, but it is now in its eighth month.

Washington cannot claim it was blindsided. Although not in the specific context of interceptors, it had been warned about a lagging defense industrial base and inadequate munitions stocks since at least January 2023, with warnings that the US could not afford to wait until war began to address replenishment.

The Pentagon only moved earlier this year to expand production of PAC-3 and THAAD interceptors. Plainly, the US does not need to know exactly how long a war will last before deciding to act.

But the unexpectedly prolonged conflict’s impact on stockpiles, and the long time needed to rebuild them, is undermining US deterrence in other theaters and making Washington a less potent and reliable ally worldwide.

*My article first appeared at Asia Times

The Shadow of the Axis: How Iran and Houthis Are Threatening Saudi Arabia

By: Azhar Azam

The Middle East's security architecture is under severe strain as Yemen's Houthis — strengthened by years of Iranian support — press a sustained campaign of missiles and drones against Saudi Arabia while Iran exerts pressure from the other end of the Gulf.

Tehran has helped build the Houthis into a capable regional force, supplying weapons, technology and expertise. In July 2025, for example, Yemeni forces seized more than 750 tons of Iranian munitions and military hardware bound for the militant group including missiles, drone engines, radar systems and communications equipment.

The support has continued. Days before the Houthis declared a naval blockade against Saudi Arabia, Iran reportedly flew between 10 and 21 Revolutionary Guard commanders and military advisers into Yemen along with missile- and drone-related equipment. Despite its standoff with Washington, Tehran didn't shy away from bolstering the Houthis ability to threaten Riyadh from the Red Sea.

The Houthis have framed their campaign as retaliation for Saudi Arabia's military intervention in Yemen's civil war, which began in 2015 and included a prolonged air campaign and blockade. That history does not make their current attacks on Saudi infrastructure any less dangerous, but it helps explain why the Houthis present the escalation as a continuation of the Yemen war.

For decades, Saudi Arabia has had another way to move its oil if the Persian Gulf route through the Strait of Hormuz were ever disrupted. Its East-West pipeline carries crude across the country to Yanbu Port on the Red Sea, allowing Saudi oil to reach global markets bypassing the traditional maritime route. But that route is now vulnerable too. The Houthis have attacked Saudi-linked shipping and are advancing along Yemen's coast toward the Bab el-Mandeb Strait, another critical gateway for Saudi oil exports between Yemen on the Arabian Peninsula and Djibouti and Eritrea on the African coast.

Through the Hormuz and Bab el-Mandeb straits, Iran and the Houthis are executing a dual-chokepoint strategy aimed at squeezing Saudi Arabia's oil revenues by making both routes less reliable and disrupting the movement of crude to global markets. At the same time, Iran's growing influence over these two critical waterways risks undermining the hard-won rapprochement between Saudi Arabia and Iran as Houthi attacks could reignite a dormant yet deep-rooted feud.

And the Houthis have made clear that their military campaign is not indiscriminate. Senior Houthi official Mohamed al-Bukhaiti said that the group had assured Washington it would not target US vessels. The assurance came amid reported secret talks between Houthi leaders and US officials in Muscat where the group reaffirmed its commitment not to attack US shipping. Other reporting noted the Houthis had also offered guarantees regarding Israeli and other international commercial shipping while treating Saudi-linked ships as legitimate targets.

In effect, the Houthis have managed to keep America out of the conflict. Washington is attacking Tehran as an Iran-backed group targets one of its closest allies in the Middle East, Saudi Arabia — without giving the United States a direct reason to intervene.

The battlefield has since moved deeper into the kingdom. On September 19, Riyadh confirmed the Houthis had fired a ballistic missile toward the Saudi capital, their first such attempt in the latest campaign. The militant group claimed attacks on "sensitive" sites in Riyadh and an Aramco facility in Yanbu, indicating a deliberate Houthi intent to shift the conflict from borderlands to the political and economic heart of the kingdom.

Days earlier, drones launched from Iraq's Maysan province struck the East-West pipeline in the Riyadh and Medina areas. Satellite imagery showed smoke rising near Medina along the pipeline carrying Saudi crude to the Red Sea. With Hormuz closed, attacks by the Iran-aligned actors from Iraq and the Houthis threatening the Red Sea route at Bab el-Mandeb – this blueprint appears to erode Saudi Arabia’s strategic redundancy from multiple fronts.

Then came the most combustible incident. Saudi Arabia said its air defenses intercepted a Houthi drone before it entered restricted airspace over Makkah. The Houthis denied targeting the holy city, saying their targets were Saudi oil facilities and military bases. Houthis’ denial aside, the episode raised an alarm over how quickly the conflict could transcend a conventional security threat to Saudi Arabia and stir pan-Islamic concerns, potentially deepening the sectarian fault line running through the region.

The longstanding animosity, coupled with America's reluctance to protect Saudi Arabia, has pushed Riyadh to widen its security partnerships. The Makkah Joint Defense Agreement builds on the Saudi-Pakistan defense pact signed a year earlier, bringing Türkiye into the fold. The new treaty boasts a major energy producer, a nuclear-armed state and a NATO member with three leading Muslim states institutionalizing their cooperation within the framework of collective defense.

While Islamabad has extended an “unconditional” commitment to the kingdom’s security, Ankara has expressed willingness to meet Riyadh’s military needs, especially on “technical issues.” Although a collective defense pact, its significance is political as much as military. Both Pakistan and Türkiye maintain close ties with Tehran as well as Riyadh, giving them channels to press Iran to use its influence in pushing the Houthis back to the negotiating table.

That diplomatic role is already taking shape. By September 22, Egypt joined Pakistan and Türkiye to reaffirm Saudi Arabia's right to defend itself, stressing dialogue and diplomacy. The concern had by then gone international as G7 foreign ministers declared that the situation in Yemen represented an "unacceptable threat" to regional stability and global energy security. They condemned Houthi strikes on Saudi Arabia and called on Iran to end its arming and support for the group, citing violations of the UN Security Council resolutions.

The Houthis are neither an Iranian creation nor an actor with no connection to Tehran. They have their own ideology and interests, but years of Iranian backing have given them the means to threaten Saudi Arabia. Every missile and drone the Houthis fire — at Riyadh or against domestic rivals — doubles as a live combat test of Iran’s military technology and sustains Tehran's proxy war against Saudi Arabia as it fights its own war with the United States.

*My article (unedited) first appeared at Middle East Online

China's 'Golden Week' holiday now a global business opportunity

By: Azhar Azam

China's seven-day National Day holiday, also known as the "Golden Week," has become an important barometer of the country's consumer activity and economic momentum, reflecting the transition toward high-quality development. As millions of Chinese travel, shop, dine and explore new forms of leisure during the week-long break, their spending provides a useful gauge of domestic demand and Beijing's deepening links with overseas businesses.

This year's Golden Week is already showing signs of strong demand. Ahead of the holiday, group-buying orders on Douyin Life Services increased 66% between September 8 and 14. Restaurant group-buying orders were up 80%, supermarket shopping voucher orders 98% and guesthouse orders 77%.

These gains build on China's first five-year (2026-2030) plan dedicated to expanding domestic consumption, aimed at boosting retail sales of consumer goods to 60 trillion yuan ($8.8 trillion), by 2030. A measure of economic vitality, this will create a larger market where overseas companies can expand, localize and compete.

Foreign companies are capturing the opportunities generated by China's consumer market. Walmart China, for example, reported net sales of $7 billion in the second quarter of 2026, an increase of 20.7% year on year. Adapting to the holiday demand, the US retailer launched hundreds of new products – including seasonal items made with Australian beef, Italian truffles, American almonds, Malaysian Black Thorn and Musang King durian pulp – to capitalize on the opportunities created by the Chinese government's policies to stimulate consumption.

International brands are gaining exposure through commercial area. In Chongqing in southwest China, the 2026 edition of the annual Jiefangbei International Consumption Carnival, running from September 24 to October 7, has brought together hundreds of domestic and international brands and nearly 100 activities to boost consumption, supporting Chongqing's transformation into a leading international consumption hub. The ELLE International Golden Street Show at the carnival was a platform to showcase major international brands to Chinese consumers, like Michael Kors, ICICLE, and ZHAOYI YU.

Hotels are becoming an important part of China's holiday economy and demand for long hotel stays is rising. Trip.com said bookings for stays of seven nights were up 123% compared to the reservations for last year's National Day holiday.

International travel links are deepening alongside domestic demand. Over the three-day Mid-Autumn Festival holiday in late September, foreign nationals accounted for 728,000 inbound and outbound trips, up 37.7% year on year as inbound tourism gathered pace.

Demand for imported goods is on the rise too. The duty-free market on the tropical island of Hainan witnessed a new shopping boom during the Mid-Autumn Festival holiday, offering a glimpse of the demand for overseas products. According to Haikou Customs data, 38,600 shoppers made 179,000 purchases in Hainan during the three days.

The spending spree is driven by Beijing's policy allowing free entry of international products at zero tariff at the world's largest free trade port by area. The expansion of China's durian market also reaffirms Beijing's promise to ramp up its imports. After China approved durian imports from five countries including Vietnam, Malaysia and Laos in 2022, its durian imports reached 1.87 million tons in 2025 – twice the volume recorded in 2022. Beijing's pledge to expand imports under its 15th Five-Year Plan (2026–2030) is translating into more opportunities for overseas producers, particularly across Southeast Asia.

The trade data reinforces the scale and diversity of the Chinese economy. In the first eight months of 2026, exports rose 14.6% year on year while imports expanded 22%. Import growth outpacing export growth for a sixth consecutive month. In addition to agricultural products, Beijing has pledged to broaden its imports of advanced technology equipment and other components. Mechanical and electrical imports climbed 31.6% while integrated-circuit imports rose 61.7%, an indication that the opportunity unleashed by Chinese markets extends well beyond consumer goods.

In recent years, Beijing has promoted balanced import and export growth as part of its push for high-quality development and high-standard opening-up. Aligned with the 15th Five-Year Plan, the approach seeks to upgrade domestic consumption and share development opportunities with trade partners by implementing zero-tariff policies and using trade fairs to bring quality goods into the Chinese market.

After a strong Mid-Autumn Festival, the National Day holiday will help sustain China's consumer activity. With multinational retailers expanding sales, hotel bookings rising, foreign visitors flocking in large numbers and imported products finding a growing customer base – these trends demonstrate the resilience of China's economy and its commitment to balanced import-export development and greater institutional opening up.

*My article first appeared at CGTN

China’s overcapacity could also be an energy solution

By: Azhar Azam

In 2025, China's electricity demand rose about 5%. Clean power expanded fast enough to meet that surge, pushing thermal generation, mostly coal-based, down 0.7% — the first annual decline in a decade, according to Ember's China Energy Transition Review 2026. This marked a significant departure from 2015, when thermal generation fell largely because electricity demand barely grew, rising just 0.5%, the slowest pace since 1974.

Beyond electricity, rapid transport electrification is also reducing domestic oil demand. Ember notes that electric vehicles (EVs) are displacing around 0.4–0.5 million barrels of gasoline a day, while broader estimates put avoided oil demand at around or above 1 million barrels a day — roughly 365–400 million barrels a year. That is more than double the 179 million barrels of government-held strategic oil inventories in OECD Europe at the end of 2025.

The findings complicate a debate usually framed as a purely industrial problem. The United States and European Union (EU) see Beijing's dominance in solar panels, batteries and EVs as a source of economic and strategic vulnerability — manufacturing capacity built on a scale that domestic demand alone can't absorb, leaving foreign markets to take the surplus.

Yet the overcapacity triggering these concerns is also accelerating the global clean-energy transition by making these technologies cheaper and more widely available, as reflected in global trade of clean-tech products that reached an estimated $479 billion in 2025.

Much of this trade has been driven by China's production. In sectors such as EVs, Beijing's manufacturing has outstripped domestic demand, putting downward pressure on global prices. These cost declines have, in turn, supported faster electrification around the world.

China’s manufacturing surplus shouldn’t be viewed in isolation. The same manufacturing capacity that has created excess supply is also supporting a rapidly expanding domestic clean-energy market. Over the past decade, China has added almost 1,700 gigawatts of wind and solar capacity — more than its entire power system in 2015. In 2025, battery-storage installations grew 84%, with China accounting for roughly 60% of new storage deployed worldwide. Electric trucks reached about 26% of new sales, a share leading European economies have just achieved in passenger cars.

Deployment at such a scale doesn’t mean all that capacity is being fully absorbed. In the first half of 2025, China's solar curtailment rate rose to 5.7% and wind curtailment to 6.6%, with curtailment in western regions such as Tibet, Xinjiang and Qinghai exceeding the country's 10% tolerance, according to national grid data. Grid bottlenecks and limited local demand have made it difficult to fully use some of the electricity generated by new renewable capacity.

Even so, clean technologies are beginning to change China's energy ecosystem. Ember finds that coal generation has been broadly flat on a 12-month moving average since early 2024. It marks an important shift: China's clean-energy buildout is quickly displacing fossil-fuel generation.

Beijing is now responding to the industrial complaints created by overcapacity. On September 1, a new consumption tax on mainstream batteries took effect, with equivalent levies on solar cells due in 2027. These tax policies may help to weed out inefficient capacity, force the exit of low-tier players and ease international trade tensions arising from overproduction.

Meanwhile, the impact of falling costs is reciprocated in affordability — one of the main constraints on decarbonization. For many emerging and developing economies, limited fiscal space is the major barrier to energy transition. As prices drop, lower-cost imports have expanded their access to clean technologies.

Trade restrictions have had limited effect. Rather than curbing China's clean-energy exports, tariffs and industrial-policy tools introduced by the United States and EU have redirected a growing share of trade flows toward developing markets. From EVs in Ethiopia to discounted solar panels in Pakistan, China's industrial scale has lowered costs across many developing economies, contributing to global emissions reductions.

As clean-energy investment expands, China's dominance is perceived differently across regions. Many developing economies view it as an opportunity to gain access to clean technologies at lower costs; advanced economies associate Beijing's scale with industrial overcapacity.

For instance, solar deployment in the EU has grown strongly in recent years, but the bloc still relies heavily on China for solar panels and key upstream inputs. The same pattern is emerging in EV batteries: EU efforts to restructure and localize production have eased some overcapacity risks while also increasing reliance on Chinese battery suppliers.

This creates a policy trade-off for Europe — greater industrial autonomy would strengthen long-term supply-chain resilience but is likely to raise costs and slow the pace of decarbonization, while continued reliance sustains faster deployment but leaves Europe exposed to ongoing dependencies.

The United States faces a similar challenge. Despite tax credits under the Inflation Reduction Act, China accounts for the majority of global clean-tech manufacturing capacity. Washington is scaling deployment in areas such as battery storage, emerging as second to Beijing, but as CSIS analysis highlights, expansion in downstream segments does not resolve upstream constraints such as limited domestic reserves and critical mineral processing capacity, limiting the scope of full self-sufficiency.

India follows a different but related trajectory. Its renewable energy installed capacity has expanded quickly, but the scale gap with China is substantial: Beijing added 315.1 gigawatts (GW) of solar capacity in 2025 versus New Delhi's 37 GW.

China's clean-tech overcapacity has become an essential feature of the global energy transition. While criticized as trade distortion, it has contributed to significant cost reductions in solar, battery and EV technologies, accelerating their adoption across developing, emerging and advanced economies. Yet the same concentration that drives lower costs also generates structural vulnerabilities, increasing exposure of importing economies to supply-chain disruption, geopolitical friction and industrial dependence — as reflected in policy responses from Brussels and Washington.

China's excess manufacturing capacity and rapid domestic deployment actually are mutually reinforcing. Producing more solar panels, batteries and EVs has intensified competition and pushed prices down. Those lower prices have made it easier to deploy the same technologies at home and abroad. China's manufacturing scale is therefore doing two things at once: creating concerns about excess capacity while also making clean technologies cheap enough to expand rapidly, including inside China's own energy system.

Beijing's role in the global energy transition is unlikely to diminish in the near term. For policymakers around the world, the challenge is not just to reduce reliance on Chinese clean technologies, but to harness the benefits of Beijing’s scale to strengthen energy security and accelerate electrification without deepening strategic dependencies.

*My article first appeared in "Eurasia Review"

US-China economic rivalry transforming into a battle for leverage

By: Azhar Azam

Several Chinese companies including Alibaba, ByteDance and Tencent have reportedly accessed compute power from GB300 chips remotely through data centers in Asian countries including Thailand, Malaysia and Japan. Less than a week after another Chinese company, Moonshot AI, released a new model, a White House official accused the firm of using one of Nvidia's most advanced processors.

Irrespective of whether it is legal or exposes loopholes in the US export control regime, the episode shows that restricting direct access cannot prevent Beijing from tapping America's advanced computing power. As technology networks become more global, controlling the physical movement of chips doesn’t necessarily mean controlling their use too.

In recent years, Beijing and Washington have pursued strategies to reduce their respective vulnerabilities to each other. The United States has raised tariffs and restricted China's access to advanced technologies, coordinating with allies on export controls targeting strategically sensitive industries. Beijing, in turn, has sought greater financial and technological autonomy to reduce dependence on US-dominated payment systems and leverage its role in critical supply chains including rare earths to safeguard its economic and security interests.

China has made rapid technological progress. According to the 2026 Stanford AI Index, the performance gap between leading US and Chinese AI models has narrowed with America still producing more top-tier AI models and high-impact patents and China leading in AI publication volume, citations, patent output and industrial robot installations. The finding points at the rising Chinese ability to develop its AI sector indigenously and the limits of the US efforts to contain China's technological development.

The US hosts 5,427 data centers, more than 10 times any other country; almost every leading chip is fabricated by the Taiwan Semiconductor Manufacturing Company, making it dependent on a single foundry. America's own ambition to lead AI development, thus, relies heavily on international production networks.

Donald Trump's authorization to resume sale of the Nvidia H200 AI chips to "approved customers" in China was a calculated gamble. By giving Chinese tech giants access to a less advanced generation and embargoing the cutting-edge Blackwell chips, he intended to exert US influence on China's AI ecosystem and strengthen his bargaining position against Beijing in trade negotiations.

But by placing caps on the H200 deployment in the mainland and using them for training AI models, China continues to support its domestic AI growth while benefiting from American technology and avoiding long-term dependence on Washington, effectively blunting the leverage Trump is searching for. The response reinforces the perception that US attempts to constrain China's technological advancement has only accelerated the latter's determination to build a self-reliant semiconductor industry. Nvidia CEO Jensen Huang himself has blamed US withdrawal from the Chinese market for helping fuel China's semiconductor industry.

A White House report, accusing Chinese exporters of routing goods through more than 40 countries to evade US tariffs, earlier reflected the limits of Washington's effort to reduce its economic dependence on China, revealing that the United States may erect barriers to curtail the influx of Chinese goods into the country but it cannot prevent the China-linked supply chains from adapting.

The report itself acknowledges that some of the shift stems from “legitimate changes” in production, investment and sourcing. This indicates that not every China-linked product reaching the United States through a third country represents tariff evasion and that companies are genuinely moving production in response to geopolitical risks.

Recent research by the Peterson Institute of International Economics demonstrates that Chinese goods and services despite years of US tariffs remain deeply woven into US imports from third countries. While tariffs have reduced direct bilateral trade, they haven’t eliminated Chinese inputs across global supply chains. A Nikkei Asia survey also found that Chinese companies had expanded their global market share albeit tariff barriers.

At the same time, China remains connected to American demand. Even as bilateral trade has shrunk, Beijing's exports of electronics, computers and circuit-board assemblies to neighboring Asian countries have increased. As much of this production is tied to the US artificial intelligence (AI) boom, it has allowed Chinese manufacturers to benefit indirectly from Washington's AI investments. This does not necessarily mean that Chinese goods are being illegally routed into the United States, rather emphasizes the underlying trade relationship remains intact.

With studies already showing that Chinese inputs entering the US through intermediaries such as Vietnam and Mexico, the Trump administration appears to have realized that complete commercial divorce between the two biggest economies in the foreseeable future is improbable. Its new approach appears to move away from outright decoupling toward extracting economic concessions from China such as securing its commitment to address US concerns regarding critical minerals supply chains, purchase Boeing aircraft and restore market access for US farm produce.

This does not mean that the United States has abandoned economic pressure. Washington is pursuing selective commercial engagement with China while continuing to restrict its access to technologies deemed critical to US national security. The emerging strategy suggests that the Trump administration is focusing on increasing trade with Beijing in non-sensitive sectors to retain economic leverage over China. Beijing, meanwhile, is doubling down on its efforts to build domestic capabilities to reduce exposure to foreign suppliers and establish its own leverage against Washington.

The Trump administration's policy has clearly shifted from decoupling to selective economic engagement. While Washington is deploying tariffs and technology curbs to secure benefits for domestic manufacturers and farmers, China continues to draw on its dominance in global supply chains and limited reliance on American semiconductors to strengthen its position in future trade negotiations. In this fierce brinkmanship, both sides are playing to their respective advantages to prevail over the other: Washington by applying economic pressure and Beijing by finding ways to blunt it.

*My article first appeared in Asia Times and EUalive

How Saudi Arabia is turning great-power rivalry to its advantage

By: Azhar Azam

The US-Saudi nuclear energy deal, also known as a 123 Agreement, is the culmination of Riyadh’s decades-long effort to diversify its energy mix, reduce the massive amount of oil and gas consumed domestically and free more hydrocarbons for export and higher-value uses.

Electricity demand in the kingdom has grown rapidly due to population growth, urbanization, air conditioning and energy-intensive water desalination plants. With local energy consumption projected to surge three fold by 2030, continued reliance on fossil fuels for domestic electricity production risks reducing Saudi Arabia's export revenues, compressing its fiscal space to finance the Vision 2030 and achieve strategic autonomy.

According to the International Energy Administration (IEA), natural gas and oil account for about 58% and 41% of Saudi Arabia's electricity generation. By replacing just a fraction of fossil fuels with nuclear power, Riyadh can redirect the displaced crude and gas to higher-value industrial sectors, diversifying its economy and pushing non-oil exports.

Nuclear energy is expensive. Implementing such a project requires enormous upfront investment, long timeline and sophisticated regulatory institutions. In comparison, solar energy is exceptionally attractive especially for Saudi Arabia, which has abundant sunlight and large tracts of land that makes the country suitable to construct some of the world’s lower-cost solar projects.

Riyadh is not choosing between renewables and nuclear; it’s pursuing both as part of its dual-track strategy. Through the Vision 2030, Saudi Arabia initially set a target of generating 9.5 gigawatts (GW) of renewable energy. By the end of 2025, the total capacity of proposed renewable energy projects had reached approximately 64GW with solar projects in Shaybah and Najran producing electricity at just $1.04 cents/kWh and $1.09 cents/kWh. While the United States is emerging as the kingdom's partner in civil nuclear energy, China has become indispensable to Riyadh's energy transition through its low-cost solar panel manufacturing and dominance in clean-energy supply chains.

At the same time, Saudi Arabia is undergoing a rapid industrial transformation. Heavy industries such as mining, petrochemical and manufacturing require stable, continuous electricity at scale. As nuclear reactors provide uninterrupted baseload power and high-temperature industrial heat that solar and wind technologies struggle to deliver, the kingdom has been seeking a nuclear energy cooperation deal with America to advance its economic ambitions.

Earlier, the Biden administration offered Riyadh a civil nuclear cooperation agreement and security guarantees, tying it with Saudi normalization with Israel. Riyadh signaled to proceed with the "grand bargain" yet following Hamas' Oct 7 attacks and Israel military operations in the Gaza Strip and beyond, it in February 2024 reverted to its prior stance, calling for an independent Palestinian state before establishing formal diplomatic relations with Israel. As nuclear negotiations with Washington stalled, Saudi Arabia signed a memorandum of understanding (MOU) with Beijing on nuclear safety and security at the first China-GCC Forum on Peaceful Use of Nuclear Technology.

Saudi Arabia believed that the most effective way to shield its nuclear ambitions from potential sanctions and international scrutiny over proliferation risks was to secure a nuclear cooperation deal with the United States. The MOU with Beijing gave Riyadh the crucial leverage to push back against the United States' precondition and showcase that it had alternatives if America remained inflexible. Saudi Arabia further indicated its determination to pursue an independent foreign policy by signing a mutual defense pact with Pakistan in September 2025 that vowed to consider an aggression on either as an aggression against both.

The nuclear energy deal is being celebrated as a "win" in the United States against China and Russia even as America has 123 Agreements with dozens of countries including China. It rather represents Saudi Arabia's diplomatic triumph given it has secured a pathway for nuclear cooperation without any commitment to formalize ties with Israel. Unlike many countries struggling to navigate intense US-China rivalry, the kingdom has successfully turned the great-power competition to its advantage, using its ties with Beijing to extract concessions from Washington.

Meanwhile, China is already deeply embedded in the regional energy infrastructure and economic landscape. In addition to strengthening collaboration with Gulf nations in the renewable sector, Beijing has overtaken the United States and European Union to emerge as GCC's largest trading partner while demonstrating its utility as a peace broker such as in the Saudi-Iran rapprochement.

The United States cannot realistically expect Saudi Arabia to exclude China from its energy transition since Beijing has capabilities, scale and cost advantages that are difficult to replicate elsewhere. Through the agreements such as the civil nuclear deal, Washington however could ensure that China's role in the kingdom does not extend beyond trade, infrastructure and green technology and the United States retains an outsized influence in shaping the Saudi and region's future economic and strategic trajectory.

Still by conditioning the nuclear agreement with Saudi Arabia's participation in the Abraham Accords, President Donald Trump has once again vindicated that Riyadh's approach is heading down the right path. If Washington continues to make access to nuclear technology contingent on political concessions, it risks conceding more ground to China in the region. The Middle Kingdom may not replace the United States as Riyadh's principal strategic ally but it will create an opportunity for the East Asian country to establish itself as Saudi Arabia's long-term partner in the region.

Amid an intense US-Iran conflict, the Washington-Riyadh nuclear agreement has gained renewed attention. Yet Saudi Arabia's focus remains on accelerating Vision 2030, which requires diplomatic engagement with Tehran, security guarantees and civil nuclear cooperation with Washington and deepening economic ties with China. This omnidirectional diplomacy enables Riyadh to manage threats from Iran's regional proxies, acquire advanced weapons from the United States and maintain strong trade ties with its largest crude buyer and technology partner, Beijing.

Saudi Arabia is doing precisely what Trump's National Security Strategy and National Defense Strategy expect from its regional allies. Even before these strategies called on regional allies to assume greater responsibility for their own defense, the kingdom had signed a mutual defense pact with Pakistan. Adapting to Trump's transactional approach, Crown Prince Mohammed bin Salman during his visit to the White House last year raised his investment pledge in the United States from $600 billion to nearly $1 trillion, targeting infrastructure, technology and industry. Through these initiatives, Riyadh diversified its security partnerships without abandoning Washington as a primary security anchor while broadening its relationship with the United States on a more solid, durable foundation.

The kingdom's approach can be summed up in one word: pragmatism. As the United States redefines its role in the Middle East, Saudi Arabia is adjusting just as quickly. By avoiding getting pulled in the regional conflicts and expanding cooperation with Washington beyond defense and security into higher-growth sectors such as artificial intelligence, cloud computing and semiconductors, Riyadh is aligning itself with the "America First" agenda, Trump's blueprint emphasizing investment, technology and industrial renewal.

In return, Riyadh is securing critical strategic assets like advanced weapons, civil nuclear cooperation and frontier chips to accelerate its Vision 2030's goals of economic diversification and digital leadership while elevating collaboration with China on trade, manufacturing and clean-energy infrastructure. This multi-faceted approach allows Saudi Arabia to successfully leverage its relations with two major powers to preserve its national strategic objectives and foster modernization.

*My article first appeared at "Cambridge Middle East and North Africa Forum/Manara Magazine"

What Xi's World AI Conference speech means for global AI governance

By: Azhar Azam

Lead: Chinese President Xi Jinping used a keynote address at the World AI Conference in Shanghai to lay out China's vision for a more inclusive, multilateral approach to governing artificial intelligence.

The 2026 World Artificial Intelligence Conference (WAIC) and High-Level Meeting on Global AI Governance concluded in Shanghai on July 20, reaffirming the city's preeminence as a leading global hub for AI innovation and governance.

This year's exhibition, themed "AI Partnership for a Brighter Future," brought together more than 1,100 enterprises and showcased roughly 3,000 AI products and technologies.

Since its inception, the WAIC has evolved into one of the world's premier platforms for unveiling technological innovation, facilitating exchanges among academics, entrepreneurs and industry pioneers, fostering international collaboration, translating ideas into real-world applications, and advancing dialogue on AI governance, ethics and emerging technological standards.

At the opening ceremony, President Xi Jinping delivered a keynote speech outlining China's perspective on the future of AI and its global governance.

Describing AI as the driving force behind a new wave of technological revolution and industrial transformation, he highlighted both the immense opportunities created by rapid progress in intelligent connectivity, human-machine collaboration and cross-sector innovation, as well as the complex governance challenges they present.

Xi urged countries to adopt a people-centered approach to AI development and work together to build a just and equitable global AI governance system. He stressed that AI should serve humanity and contribute to common prosperity and collective security, advocating closer global cooperation on development strategies, governance rules and technical standards to forge a consensus-based governance framework.

His remarks underscored the growing priority Beijing places on cultivating an inclusive global AI governance architecture to advance innovation-driven development for all. Rather than pitching China as the leader of a new global AI order or challenging any country's dominance, he emphasized creating a multilateral AI governance mechanism that promotes openness, narrows the AI divide and extends the benefits of AI to developing countries.

Xi's speech built on a sustained policy focus on AI. During a visit last year to the Shanghai Foundation Model Innovation Center, a large-model incubator home to more than 100 enterprises, he observed that AI was entering a period of "explosive growth" and urged the city to take the lead and become a frontrunner in AI development and governance.

In a fragmented global AI governance landscape, Xi continues to make AI a new frontier for human development and international cooperation, reinforcing China's commitment to sharing AI opportunities with the Global South.

His vision for global AI governance is anchored in the China-proposed Global AI Governance Initiative. Unveiled by Xi in 2023 at the opening ceremony of the third Belt and Road Forum for International Cooperation in Beijing, the initiative seeks to build a community with a shared future, articulating the country's proposals on AI across three main areas: development, security and governance.

The initiative provides a comprehensive framework to promote technological innovation, strengthen international collaboration to mitigate emerging AI risks and lower barriers to technological access. The initiative draws on China's domestic AI governance experience, with the country regarded as among the first nations to introduce detailed, binding regulations on some of the most common AI applications.

At WAIC, Xi further advanced this vision by calling for the establishment of early warning and emergency response systems to prevent abuse and malicious use of AI.

China has expanded its domestic AI development through the "AI Plus" initiative, which featured prominently in Xi's address. The blueprint aims to supercharge productivity by integrating AI across every facet of industry, government and society.

Looking ahead, Beijing plans to advance the strategy by promoting the deployment of next-generation intelligent terminals and AI agents, encouraging the large-scale commercial application of AI across key sectors.

AI should not remain an exclusive preserve of a handful of technology powers. This principle underpins the Global AI Governance Initiative, which calls on all countries to build consensus on promoting the development of AI technologies, boosting information exchange and working together to jointly develop AI governance mechanisms that make AI more secure, reliable, controllable and equitable while preventing technological monopolies.

The initiative upholds a people-centered model. It urges respect for the sovereignty of other countries and opposes the use of AI to manipulate public opinion, spread disinformation or intervene in other countries' internal affairs. It also advocates greater representation of the Global South. Together, these principles help safeguard humanity's common interests and international peace and development.

Open-source and accessible AI is a shared asset. Beijing has moved to act on that principle: China's National Development and Reform Commission and other government departments jointly released a Global AI Governance Action Plan during the WAIC, mapping out cooperation in data, computing power and talent development.

By implementing the plan, China is striving to provide international public goods to help developing countries build AI capacity. Chinese companies and research communities have also made advanced models such as DeepSeek and Qwen more accessible, including through open-source releases and lower-cost deployment options, enabling nations, particularly across the Global South, to accelerate their AI transformation.

To further support their AI development and capacity-building, Xi announced a series of measures at WAIC. These include providing specialized training on artificial intelligence to 5,000 individuals from developing countries and establishing AI application cooperation centers in partnership with the Association of Southeast Asian Nations, the League of Arab States, the African Union, the Community of Latin American and Caribbean States, the Shanghai Cooperation Organization, and BRICS.

Xi also announced plans to enable 30 countries to use AI-powered meteorological warning systems, as part of China's response to the United Nations' "Early Warnings for All" campaign.

Beijing has institutionalized this approach through mechanisms such as the Group of Friends for International Cooperation on AI Capacity-building, which seeks to foster partnerships and harness AI to empower sustainable development in partner nations.

Since its establishment in 2024, the group has convened several workshops involving around 200 representatives from member states. Xi's call to strengthen AI capacity-building and bridge the widening AI and digital divides gives practical expression to China's vision of inclusive AI governance.

The endeavor has been seen in the West as an attempt by China to amplify its influence within the United Nations system. In fact, it aims to promote open-source and accessible AI technologies and scale up South-South cooperation in computing power, data and talent to ensure that AI dividends are shared more equitably by people around the world.

The conference opened one day after the formal establishment of the World Artificial Intelligence Cooperation Organization (WAICO), an idea Xi floated last year. The "important milestone" in the history of AI development responded to the call of developing countries, constituting a significant step toward uniting the international community to promote AI development and governance.

WAICO is incorrectly portrayed as China's AI coalition to rival the U.S.-led Pax Silica. While the former embodies China's development-oriented AI approach to elevate the role of the Global South in global AI governance through capacity-building and technology sharing, the latter focuses on building a resilient technological ecosystem, securing control over critical AI infrastructure, and achieving technological hegemony and digital extraterritoriality. WAICO thus offers a just and inclusive framework, encompassing participatory governance, shared development, equitable access to AI and technical collaboration.

China's commitment to AI cooperation extends beyond its work with the developing world. During a meeting with U.S. business leaders, including Tesla, Nvidia and Apple in May, Xi reaffirmed that China would continue opening its economy. Even as Washington has sought to restrict Beijing's access to advanced AI chips, the Chinese president struck an optimistic tone, reflecting his conviction that mutually beneficial collaboration could still define the future of bilateral economic and technological relations. Those restrictions have instead prompted Chinese companies such as Alibaba to accelerate indigenous innovation and develop AI models that compete with leading U.S. companies.

Despite China's triumphs in AI, Xi remains committed to international cooperation. According to Stanford University's 2026 AI Index, Beijing has effectively closed the AI model performance gap with Washington, leading in publication volume, citations, patent output and industrial robot installation. Even companies in the U.S. are reportedly adopting Chinese open-source AI models because they are highly competitive compared with U.S. frontier models and accessible at lower cost.

With China's LineShine overtaking the U.S.-based El Capitan as the world's fastest supercomputer, Beijing has further demonstrated its ability to sustain technological progress despite America's export controls.

In his maiden appearance at WAIC, Xi described AI both as a shared opportunity and a shared challenge, necessitating collective action and extensive international cooperation. Through initiatives such as the Global AI Governance Initiative, the expanded "AI Plus" initiative, AI capacity-building and training programs, AI-powered meteorological warning systems, the Group of Friends and the newly launched WAICO, he is positioning Beijing to help developing countries strengthen their AI capabilities, embrace emerging technologies more rapidly and play a more active role in global AI governance.

Xi's address leaves little doubt about the direction China intends to pursue: advancing an inclusive AI governance framework that places development, multilateralism and access to AI, not "China First," as the country's central priority. In a world divided by technological competition and faced with technological exclusivity, such an approach has the potential to serve all humanity rather than a few select countries.

*My article first appeared at "China Diplomacy in the New Era"

Nato was never meant to fight every American war

By: Azhar Azam

The NATO summit in Ankara was expected to showcase allied solidarity after European nations agreed to a historic increase in defense spending. Instead, it ended with President Donald Trump intensifying his criticism of the transatlantic alliance.

Beyond burden-sharing, he lambasted European allies for declining to support US military campaign against Iran, arguing that the United States had spent decades underwriting Europe's security. Having long pressed Europe to spend more on defense, Trump now appears to measure allied loyalty by support for US-led military operations.

Trump's assumption rests on a premise that European allies benefitting from US security guarantees are also supposed to fight America’s wars. But that was never the bargain Nato struck in 1949. Although the alliance's role has evolved to crisis management, its core purpose remains safeguarding the freedom and security of its members, a commitment Europe has largely fulfilled.

After the September 11 terrorist attacks, Nato for the first and only time in its history invoked Article 5. Europe fought alongside the United States in Afghanistan for two decades, treating an attack on America as an attack on itself.

While Washington by far had the largest casualties in absolute terms, The United Kingdom lost 457 troops, Canada more than 150 and France 90. Germany, Italy and other countries also suffered significant casualties. Some European countries with much smaller populations than the US lost almost as many troops in relative terms. Denmark – facing intense pressure from Trump to cede its semi-autonomous region of Greenland to the US – recorded one of the coalition's highest per-capita fatality rates.

The 2003 Iraq War exposed deep political rifts; it did not represent European abandonment. Britain, Italy, Poland, Denmark and several other Nato allies joined the US-led “coalition of the willing,” while France and Germany opposed the invasion. The failure to find the alleged weapons of mass destruction later vindicated much of the skepticism surrounding the war. Yet those disagreements neither fractured Nato nor prevented its members from fighting together against the Islamic State.

Trump has long chastised European allies of freeloading on US military power, while failing to invest adequately in their own defense. In response, Nato members at last year's Hague summit agreed to dramatically increase defense spending to 5% of GDP by 2035, the alliance's most ambitious spending pledge to date.

European nations have since accelerated military procurement, expanded defense-industrial production and assumed greater responsibility for protecting the continent. Nato officials now acknowledge European allies have filled almost all the gaps left by US reductions to the Nato Force Model.

The summit showed that the debate has shifted the focus from burden-sharing to Nato’s purpose. During the US military campaign against Tehran, Trump criticized European allies for refusing to deploy naval assets to secure the Strait of Hormuz, which many European governments reckoned lay outside Nato's defensive mandate. Unlike Afghanistan after the September 11 attacks or the defense of Nato's eastern flank, they viewed attacks on Tehran as a discretionary military operation rather than an allied responsibility. Their reluctance reflected not anti-Americanism but a different understanding of Nato’s purpose.

So far, Trump has judged allied commitment by defense spending. Europe responded by committing to the higher spending target. The real issue emerging from the Ankara summit is whether Nato remains a collective-defense alliance or it is an organization whose members are expected to support US-led military operations beyond the alliance's traditional remit.

For more than seven decades, Nato has endured because its focus remained on defending against common threats without requiring its members to support every military campaign undertaken by another ally. This principle allowed the alliance to survive differences over the past conflicts without losing sight of its central mission.

Trump may expect Europe to shoulder a greater share of Nato's defense burden. But alliance solidarity cannot be measured by participation in every US-led military campaign. If this becomes the new benchmark of allied loyalty, Nato risks blurring the distinction between collective defense and collective intervention that has sustained the alliance through decades of political disagreement.

China is a both solution to–and a constraint on–global energy transition

Credit: ChatGPT

By: Azhar Azam

China’s rise as the world’s leading producer of clean-energy technologies is one of the most contentious issues in global trade. The United States and European Union (EU) in particular regard Beijing’s dominance in solar panels, batteries and electric vehicles (EVs) as a source of industrial vulnerability and strategic dependence.

Yet the overcapacity triggering these concerns is also accelerating the global clean-energy transition by making these technologies cheaper and more widely available as reflected in global trade of clean-tech products that reached an estimated $479 billion in 2025.

Much of this trade has been driven by China's production surplus. In sectors such as EVs, Beijing’s manufacturing has outstripped domestic demand, putting downward pressure on global prices. These cost declines have, in turn, supported faster electrification the world over.

The impact of falling costs is reciprocated in affordability – one of the main constraints on decarbonization. For many emerging and developing economies, limited fiscal space is the major barrier to energy transition. As prices drop, lower-cost imports have expanded their access to clean technologies.

Trade restrictions have a little effect. Rather than curbing China’s clean-energy exports, tariffs and industrial-policy tools introduced by the United States and Europe appear to have redirected a growing share of trade flows toward developing markets.

In many cases, this transition is enabled by Chinese manufacturing capacity. From EVs in Ethiopia to discounted solar panels in Pakistan, China’s industrial scale and overcapacity have lowered costs across many developing economies, contributing to global emissions reductions.

At the same time, volatility in global fossil-fuel markets could add momentum to electrification, prompting import-dependent countries across Africa and Asia-Pacific to diversify their energy mix and increase investment in renewable energy resources.

The International Energy Agency expects energy-sector investment to rise by around 5% to about $3.4 trillion in 2026, despite geopolitical and economic uncertainty. Roughly two-thirds of this capital is projected to go into renewables, nuclear power, grids, storage, low-emission fuels and energy-efficiency technologies.

Looking further ahead, it forecasts total energy investment to reach $3.7 trillion by 2035, with much of the growth concentrated in emerging and developing economies outside China. This indicates that clean energy is seen as a climate imperative as well as a means to bolster economic resilience and supporting development.

As clean-energy investment expands, China's dominance is perceived differently across regions. Advanced economies associate Beijing’s scale with industrial overcapacity; many developing economies view it as an opportunity to gain access to clean technologies at lower costs.

For instance, solar deployment in the EU has grown strongly in recent years, but the bloc still relies heavily on China for solar panels and key upstream inputs.

The same pattern is emerging in EV batteries. The EU efforts to restructure and localize production have eased some overcapacity risks; they have increased reliance on Chinese battery suppliers. As China continues to advance technologically, pressure is building on Brussels to amplify production in strategically important sectors while maintaining affordability.

This creates a policy trade-off for Europe. Greater industrial autonomy would strengthen long-term supply-chain resilience but is likely to raise costs and slow the pace of decarbonization. By contrast, continued reliance on China sustains faster deployment, yet leaves Europe exposed to ongoing dependencies.

The United States faces a similar challenge. Despite tax credits under the Inflation Reduction Act and industrial-policy support for clean-tech production, China accounts for the majority of global clean-tech manufacturing capacity. Washington is scaling deployment in areas such as battery storage, emerging as second to Beijing. Still, as CSIS analysis highlights, expansion in downstream segments does not resolve upstream constraints such as limited domestic reserves and critical mineral processing capacity, limiting the scope of full self-sufficiency.

India follows a different but related trajectory. Its renewable energy installed capacity has expanded quickly. However, the scale gap with China is substantial. This is further evident in deployment where Beijing added 315.1 gigawatt (GW) of solar capacity versus New Delhi's 37 GW.

China’s clean-tech overcapacity has become an essential feature of the global energy transition. While criticized as trade distortion, it has contributed to significant cost reductions in solar, battery and EV technologies, accelerating their adoption across developing, emerging and advanced economies.

Yet, the same concentration that drives lower costs in clean technologies also generates structural vulnerabilities, increasing exposure of importing economies to supply-chain disruption, geopolitical friction, and industrial dependence, as reflected in policy responses from Brussels and Washington.

As demand for clean technologies surges globally, their supply remains highly concentrated in China, with advanced economies seeking to reduce reliance through industrial policy whereas developing and emerging economies prioritizing affordability and deployment.

Beijing’s role in the global energy transition is unlikely to diminish in the near term. For Western policymakers, the challenge is not simply to reduce reliance on Chinese clean technologies, but to strengthen energy security without undermining the pace of electrification.

The limits of Kazakhstan’s Middle Corridor push

By: Azhar Azam

Central Asia is emerging as a critical hinge in the Eurasian trade and energy architecture. As Russia’s war in Ukraine has disrupted northern routes and instability in the Middle East exposes vulnerabilities in maritime chokepoints such as the Strait of Hormuz, demand for overland alternatives has accelerated.

Once considered secondary to the North Corridor, the Trans-Caspian International Transport Route or the Middle Corridor – linking China and Europe via Central Asia, the Caspian Sea and the South Caucasus – has become a crucial artery. It is now widely viewed as a diversification pathway by countries seeking to reduce exposure to geopolitical risks.

For Kazakhstan, the Middle Corridor presents both an opportunity and a test. If managed effectively, the route can diversify the country’s economy beyond hydrocarbons and cement its role as a regional logistics hub. Otherwise, Astana may remain merely a transit passage for bigger markets without substantial economic and development gains.

A 2023 World Bank report found the Corridor was unlikely to replace the northern route as a land connectivity option, acknowledging the transport link had already captured a limited share of transcontinental trade and could expand further if key bottlenecks were addressed. The study also highlighted its developmental relevance for Kazakhstan, Azerbaijan, and Georgia by helping them to reduce reliance on a narrow set of export partners and low-value complexity commodities.

This paper gains a renewed importance as global trade navigates a complex global environment, where infrastructure isn’t solely a means of moving goods efficiently; it’s a tool to strengthen economic resilience and competitiveness.

Despite its potential, the Corridor’s performance is constrained by infrastructure gaps, non-harmonized border procedures and uneven logistics capacity across participating states. These factors curtail its ability to function as an integrated alternative to northern and maritime routes.

To overcome these obstacles, development finance institutions have stepped in with significant financing, including World Bank-backed investments in rail connectivity in Türkiye, greenfield railway line between Mointy and Kyzylzhar, and highway reconstruction in Kazakhstan. These investments reflect institutional confidence in the Corridor’s ability to boost regional connectivity and sustain economic diversification.

Momentum is already building. Freight volumes along the corridor have tripled over the past five years, supported by investments in ports, railways and logistics infrastructure. By upgrading east-west transport capacity and modernizing logistics systems, Astana is positioning itself at the center of this transformation both as a transit state and a strategic Eurasian logistics hub.

The success of this strategy depends not only on rising freight volumes but also on whether infrastructure investment generates inclusive and sustainable economic benefits, contributing to domestic and regional development.

Backed by the World Bank and the Asian Infrastructure Investment Bank, modernization of Kazakhstan Temir Zholy – the national railway operator – focuses on tariff reform, institutional restructuring, divestment of non-core assets, separation of infrastructure from freight and passenger operations and greater private participation in rail transport.

Yet without consistent implementation by policymakers, growing transit volumes may not produce lasting economic benefits, leaving Kazakhstan primarily a transit passage than a more integrated part of regional supply chains.

Astana is simultaneously diversifying its external partnerships. It is pursuing a close engagement with the US across energy, transport and investment alongside deepening ties with China and continued cooperation with Europe to avoid dependence on a single bloc. While this multi-vector approach elevates Kazakhstan’s strategic relevance; it could turn Central Asia into a theater of great-power rivalry, with implications for its own and regional development agenda.

China’s economic footprint reinforces this trend. Trade between Beijing and Central Asia has reached record levels, supported by investment in transport infrastructure, logistics nodes and industrial capacity. This helps bolster regional connectivity and economic integration, yet also intensifies competition over transit routes and strategic leverage in the region.

Meanwhile, Kazakhstan’s status as a key Eurasian oil exporter further highlights the importance of non-Gulf supply routes as tensions around the Strait of Hormuz surge. However, diversification remains limited: roughly 80% of the country’s crude exports still move through the Russia-linked Caspian Pipeline Consortium pipeline, underscoring the need to develop additional corridors.

Globally, trade is being organized around overlapping corridors rather than a single integrated network. As the UN Trade and Development noted earlier this year, geopolitical fragmentation and rising regulatory and logistical pressures are altering supply chains across regions. Its recent assessment warns that non-tariff measures such as regulations, standards and compliance requirements impose higher export costs than tariffs in most economies.

These observations indicate that strategic and national security considerations – not just cost and efficiency – are driving external intervention in the region. For Central Asia, these factors compound existing economic and security challenges as fragmented standards, inconsistent customs procedures and uneven regulatory alignment continue to slow transit and raise costs despite infrastructure investment.

As global uncertainty deepens amid growing US-China competition, efforts are intensifying across the region to establish alternative trade and energy corridors, even as landlocked geography continues to constrain connectivity. Kazakhstan’s role in the Eurasian trade is likely to expand as these shifts take hold. Yet the real question is whether the country can translate this connectivity into genuine economic development for itself and the region or remain just a passage between bigger economies.

Emerging markets are the missing piece in China–U.S. stability

By: Azhar Azam

A White House fact sheet following meetings between U.S. President Donald Trump and Chinese President Xi Jinping said the two leaders reached understandings to enhance stability and confidence for businesses and consumers. The document emphasized a “constructive relationship of strategic stability,” reflecting recognition of economic interdependence and the need to steady major-power economic ties.

For emerging markets and developing economies (EMDEs), these signals matter given the macroeconomic backdrop is closely tied to the U.S.–China relationship. Although EMDEs have contributed about 60% of annual global growth, they are highly exposed to debt stress, financial volatility, and external disruptions. These constraints are slowing economic expansion, and critically, limiting investments in health, education and infrastructure amid rising development needs.

After a year of higher trade barriers and elevated uncertainty, global activity faces renewed pressure from the war in the Middle East. According to the International Monetary Fund’s latest World Economic Outlook, the conflict-induced slower growth and rising inflation are expected to weigh heavily on EMDEs, with commodity-importing countries particularly exposed.

Energy markets are a key transmission channel. Disruptions in the Strait of Hormuz have pushed up oil prices, spiking import costs for energy-dependent economies. Rising energy costs have fed into inflation, widened financial and current-account deficits, and prompted monetary tightening. Governments are likely to respond with higher interest rates or spending cuts, which in turn will stifle growth and deepen instability.

Financial markets accelerate these spillovers. During periods of stress, capital tends to flee toward safe-haven assets, particularly the U.S. dollar. This phenomenon triggers currency depreciation, raises borrowing cost and lowers investment in development priorities such as infrastructure, health and education.

Debt vulnerabilities compound these challenges. Many low- and middle-income countries face heavy debt servicing burdens that constrain fiscal space for development spending. External shocks such as the Iran conflict further narrow fiscal buffers, forcing spending cuts or additional borrowing. This deepens fragility in EMDEs and slows their development trajectories.

The consequences won’t be contained within those countries. If these economies buckle under debt distress, capital flight, and fragmented infrastructure finance–American and Chinese exporters alike will lose markets.

Debt restructuring mirrors the fragmentation of global finance. China is now the largest bilateral creditor to many developing countries; Western economies wield an outsized influence over multilateral financial institutions. As coordination between major economic players becomes more difficult and mechanisms like the G20 Common Framework struggle to deliver – debt crises are likely to prolong, increasing uncertainty and suppressing global demand.

Trade is also being reorganized by geopolitical competition between the United States and China. Supply chains are not contracting; they are rerouted through intermediary economies. This raises compliance costs, reduces transparency and increases prices for consumers around the world. A relatively stable Washington-Beijing relationship could ease these pressures, reducing uncertainty and limiting further fragmentation.

Even in technology, cooperation is possible. The U.S.-China collaboration in areas such as public health, environmental science and basic research shows that engagement can coexist. Export controls alone are unlikely to determine technological leadership. The challenge is to balance safeguards with continued innovation and diffusion.

Despite deep distrust and strategic rivalry, there remains scope for cooperation between Washington and Beijing in areas that directly affect global economic stability. This does not require broad political alignment, rather pragmatic coordination where interests overlap — including energy security, crisis management, and resilience in global supply chains.

Neither the United States nor China can insulate itself from instability abroad. Emerging markets are central to global demand, commodity consumption, manufacturing expansion, and future growth. Instability there will inevitably feed back into both economies through weaker trade, financial volatility and disrupted supply chains.

The defining question is no longer whether fragmentation will shape the global economy — it already does — yet whether it can be managed without exporting disproportionate instability onto more vulnerable economies. Managed fragmentation may still allow strategic competition between major powers, but without coordination on shared risks, it will make the global economy including the two economies more volatile, more uneven, and less predictable.

ABAC meeting charts course for Asia-Pacific stability amid global trade turmoil

By: Azhar Azam

Lead: As the United States doubles down on tariffs and trade barriers, business leaders from across the Asia-Pacific are looking to China to hold the line on open markets.

The Asia-Pacific Economic Cooperation Business Advisory Council (ABAC) concluded its meeting in Mexico City recently, with a strong and unified call to restore stability in global trade. The event brought together some 200 business leaders and policymakers from China and 20 other APEC economies – collectively representing about 60% of global GDP – who urged bold, coordinated action to safeguard long-term prosperity across the region.

Delegates expressed deep concerns over mounting pressures on the global economy, including energy market volatility, persistent supply chain disruptions, rising trade and investment restrictions, and growing food security risks. Long-term growth, they said, depends on open markets and the adoption of digital and green infrastructure.

In response, ABAC outlined priority actions: accelerating progress toward the Free Trade Area of the Asia-Pacific (FTAAP), strengthening supply chain resilience, investing in trade and logistics infrastructure and reducing non-tariff barriers to food trade. The measures, members said, are necessary to stabilize trade flows and bolster the region's capacity to absorb external shocks.

The outcomes of the meeting reflected a convergence on restoring stability and predictability to the global economy, reviving growth momentum and reinforcing the foundations of regional economic cooperation. Delegates conveyed a shared concern that increasing fragmentation, supply shocks and policy uncertainty are eroding confidence and constraining economic activity across the Asia-Pacific.

To address these threats, members called for advancing early deliverables and harmonized trade rules and regulatory frameworks, enhancing transparency, reducing trade barriers, establishing permanent ban on tariffs for digital products and promoting the responsible use of artificial intelligence. The measures aim to boost cross-border trade and investment, laying the groundwork for a more inclusive Asia-Pacific.

In a world dominated by steeply rising protectionism and unilateralism, ABAC has set out a strategic direction for the region. Launched in February, its 2026 work program under the theme “Openness, Connectivity and Synergy” reaffirms its commitment to open markets, regional integration and collaborative innovation.

Openness, anchored in trade and investment liberalization, and stronger connectivity protect economic expansion by fortifying supply chain stability, regional linkages and people-to-people exchanges. Synergy serves as the driver of innovation and sustainable development, enabling economies to collectively harness technological change and translate it into more buoyant growth for economies in the region.

A consensus also emerged on a rules-based, open-market approach with resilience built through robust supply chains, improved connectivity and greater transparency. The meeting also emphasized trade facilitation and digital modernization, such as paperless systems and interoperable regulatory frameworks, alongside closer alignment between the business community and policymakers. This implied an implementation-focused agenda to improve the efficiency of the regional economy.

The meeting sent positive signals for shoring up cooperation across the Asia-Pacific, with the council releasing statements on FTAAP progress and renewing its commitment to the APEC Connectivity Blueprint.

In line with the Ichma Statement, the council outlined parallel strategies to accelerate the FTAAP, combining near-term steps with longer-term structural reforms. The approach reflects a focus on translating existing mechanisms into coordinated action, reinforced by a commitment to a connectivity framework spanning physical, institutional and people-to-people linkages — aimed at enabling seamless regional flows of trade, services and talent.

ABAC is widely regarded as a key mechanism for translating complex geopolitical shifts and evolving business conditions into actionable recommendations. Feedback from the recent session underscored a shared sense of urgency for decisive action to restore stability in global trade to ensure policies remain grounded in economic realities.

Representatives from participating economies and organizations similarly view the forum as a key bridge between government priorities and business execution while expecting ABAC to place greater emphasis on technology and innovation integration, particularly the widening AI and digital divide. This elevates ABAC from an advisory body to a conduit, linking policy direction with real-world application.

ABAC is not just about making statements or recommendations. It helps turn ideas into practical steps that economies can implement. Given that APEC members are at different stages of development, the focus is on making cooperation workable. The meeting’s outcomes show the council is steering efforts toward stable trade frameworks, stronger supply chains and expanded digital trade to address current economic pressures and reduce frictions in cross-border commerce.

Support from member economies, together with concerns over America's increasingly protectionist trade stance, adds weight to this direction. Countries have expressed backing for an action-oriented ABAC agenda under China’s APEC chairmanship alongside efforts to protect supply chain security, diversify trade links and fast-track digital transition. This points to a common recognition of the importance of upholding the rules-based multilateral trading system while encouraging innovation and supporting investment-led development across the Asia-Pacific.

Long committed to regional integration, Beijing has advocated the concept of a community with a shared future and championed multilateralism and free trade, offering developing countries access to capital and technology. As the chair of the 2026 APEC Senior Officials’ Meeting, the world's second-largest economy is expected to play a constructive role in advancing these goals, contributing to regional and global economic growth.

China is a major trading partner and a leading source of investment and infrastructure financing for many countries, earning growing international influence. Through connectivity projects of the Belt and Road Initiative, China has helped foster intra- and inter-regional trade and cultural and people-to-people exchanges across the Asia-Pacific and beyond. This positions Beijing to play a more active role in promoting dialogue, ensuring stability and maintaining focus on regional development.

The Mexico City meeting underscored ABAC's potential to serve as a stabilizing platform for the regional economy amid heightened global uncertainty. As trade policies become more restrictive and security-driven, the talks revealed a clear interest across the Asia-Pacific in preserving open markets and keeping economic priorities aligned.

As geopolitical tensions spill further into economic relations, China’s role – as APEC host and a key economic player – takes on greater significance. Its emphasis on non-interference, openness and inclusive growth may help shape the trajectory of regional cooperation and stability; against rising fragmentation, Beijing's pursuit of integration could help restore economic activity and business confidence in the Asia-Pacific.

As the region navigates a more complex global environment, this cooperation-driven leadership is essential to sustain growth, ease tensions and build an open and resilient regional economy.

*My article first appeared at China's Diplomacy in the New Era